What of the banks the Fed says have insufficient capital to pay higher dividends?
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Investors often gravitate to REITs during tough times because they typically pay higher dividends than other companies.
At the same time, these banks will probably begin to return capital more aggressively through share repurchases and higher dividends.
Investors cannot be satisfied with higher dividends if they are not also convinced that companies will be growing earnings in the future.
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The retail titan raised its dividend 9% in April, continuing its streak of higher dividends in every year since its first payout in 1974.
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In a May research report, Stifel's Mr. Topping urged big gold miners to drop their most expensive, and least attractive, projects and to return the money to stockholders through higher dividends.
Others rush to buy utility companies and commercial real estate trusts like Duke Energy (NYSE:DUKE), Southern Company (NYSE:SO), HCP, Inc. (NYSE:HCP), and Kimco Realty (NYSE:KIM) that pay similar or even higher dividends.
His plan to make a few acquisitions, pay some higher dividends (suspended when the company faltered) and repurchase equity offers shareholders very little as a way to generate high rates of return!
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Accordingly, an index that has a higher growth in dividends will eventually command a higher price than a comparable index that has lower growth in dividends.
They point out that REIT dividends are taxed at a higher rate than other corporate dividends, 39.6% versus 20%.
The higher growth in dividends in value indices then creates the value premium.
Some have pointed to the prospect of higher taxes on dividends and its potential effect on the fair value of dividend stocks.
In terms of stocks, dividend stocks have been in the eye of the storm, as investors mull the possible effect of higher taxes on dividends.
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Higher taxes on dividends will gnaw away at shareholder wealth.
Specifically, an Obama victory will stoke fear of higher taxes on dividends and ordinary income, and drive a rotation out of investment grade and high-yield corporate bonds and into municipal bonds.
The Select Sector SPDR Utilities ( XLU) dropped back to its weekly starc- band in the middle of November as many were concerned about the potential of much higher taxes on dividends.
Will higher taxes on their dividends cause these investments to be toxic?
With higher capital gains, dividends and taxes for the rich caused by ACA and the Fiscal Cliff agreement, why not wait to tax a business when it takes money OUT of the business.
It is rather twofold: the effective tax rates paid by recipients of US corporate dividends will be higher than those paid on other forms of income.
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Their valuations are low, their dividends are going higher, cash flow is going higher, profits are going higher so all these things bode well for gold stocks.
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These include extra levies on those who pay the wealth tax, higher inheritance tax, an extra 3% tax on dividends, heavier charges on stock options, higher taxes on financial transactions, banks and oil firms, and a 5% extra tax on big companies.
On average, the money spent on buybacks was 50% higher than the amount spent on dividends.
Are high dividend-paying stocks going to lose value if their dividends are taxed at higher rates?
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Higher taxes on capital gains and dividends will not be pleasant for anyone.
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Those rate hikes may be getting most of the attention, but the real cudgel would be higher taxes on capital gains and dividends going to high-earners.
That means those folks will already be paying a top tax rate of 39.6 percent on ordinary income as well as higher rates on capital gains and dividends.
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It may be politically incorrect to say so out loud, but higher taxes on capital gains and dividends, the latter to the same rate level as earned income, would be particularly destructive.
Higher taxes on capital gains and dividends, abstracting from issues of equity and fairness, reduce real economic growth, cause weaker consumption and decreases in business capital spending, reduce employment, and labor force growth, and help bring about less potential output.
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There are tax systems where there is no tax on dividends at all: a higher corporate tax rate being used instead.
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